His remarks come in response to Chris Grayling's announcement that the failed East Coast franchise will be taken over by the DfT in June in order to smoothen the transition to a brand-new East Coast Partnership, which will operate as a public-private partnership similar to South Eastern.
From June 24, VTEC is to be replaced by the London North Eastern Railway brand, evoking the name of the company which ran the East Coast Main Line prior to nationalisation in 1948.
The government is set to renationalise the East Coast mainline, one of Britain's busiest railway lines.
It will be the third time in under a decade that ministers have had to intervene.
Shadow Transport Secretary Andy McDonald accused Mr Grayling of treating the opposition and the Commons with contempt after withholding his statement until half an hour before he delivered it.
Perth-based Stagecoach said: "We have now been advised by the Department for Transport that the Secretary of State for Transport plans to announce today that he intends to appoint the "operator of last resort" (OLR) to operate the InterCity East Coast trains services".
"In all circumstances ownership of the infrastructure will remain in the public sector, but the railway is at its strongest when it is a genuine partnership between public and private".
United Kingdom government will take back control of the running of the rail route between London and Edinburgh from private operator Stagecoach (temporarily) after the company failed to make the contract work financially.
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He said: 'It's important staff and passengers are properly protected while, once again, the transport secretary tries to patch up a failing franchise system that everyone knows doesn't work.
Stagecoach's chief executive Martin Griffiths estimated the company's total losses at £260m, in February.
" When it is fully formed the new LNER operation will be a partnership between the public and private sectors".
Mr Grayling said the decision had been "very finely balanced" between an operator of last resort and a new, non-profit contract for Vtec.
"After three shambolic private sector failures on the East Coast the message should now sink in that these cowboys can not be trusted and should be locked out of the system on a permanent basis".
Grayling says the DfT will then "begin the task of working with Network Rail to bring together the teams operating the track and trains on the LNER network".
Mr Grayling said he has received "official advice" that Virgin and Stagecoach should be allowed to continue bidding for future rail franchises.